Miami-Dade

Appraisal Pain  

Cities search for solution to declining property values

By Randy Abraham

Local municipalities will have to meet the challenges posed by a slumping real estate market and the effects of a state mandate from voters to cut taxes beyond last year’s legislative cut.

The preliminary tax rolls released by the Miami-Dade Property Appraiser’s Office show the first decline in taxable property values in the last 25 years, with the exception of 1993, the year after Hurricane Andrew caused billions of dollars of damage. Countywide, the value of taxable property is preliminarily assessed at $238 billion, a 2.7 percent decline from last year. The county appraiser’s office will release a final tax roll in early July.

Now, Aventura, North Miami Beach, Sunny Isles Beach and Miami Beach officials are searching for strategies to help them provide services with less money.

In the city of Aventura, the stock of taxable value decreased about 4.2 percent, from $9.61 billion last year to about $9.2 billion. However, the city’s tax base is buoyed by some $535 million in new construction, fueled largely by new residential projects, such as the Atrium on 188th Street.

Aventura City Manager Eric Soroka noted that part of the decline represents an average 1.6 percent decrease in property values. “We don’t like to see lower taxable values because that affects the individual,” Soroka said. He added that an additional 2.6 percent decrease results from this year’s passage of the statewide Amendment I, which mandates a doubling of the Florida homestead property exemption to $50,000 of assessed value, adds portability to the Save Our Homes annual cap on assessment increases, and provides a $25,000 tax exemption on business equipment and a 10 percent cap on annual assessment increases on non-homesteaded properties.

“Obviously, based on the real estate market and the Amendment I, we anticipated a decrease,” Soroka said. “But I don’t think we are seeing the full brunt of the decline in the housing market; I think we are going to see that next year. Without the $535 million in new construction, we definitely would have seen a decrease.”

Soroka said the city’s budget tightening last year, in the wake of the Florida Legislature’s mandate to adopt the rollback tax rate, prepared it for this year’s challenges.

“I don’t feel we will take on additional services or projects, but we do not expect to cut any services,” he said. “We are fortunate in that we contract out a lot of our services, and that we have already completed over $110 million in capital projects in the past 10 years, which puts us in a good position to have those costs behind us.”

In Sunny Isles Beach, which has also seen significant new high-rise and high-value construction, the value of existing real estate dropped about 5.1 percent, from about $6.29 billion to about $5.96 billion. However, about $335 million in new construction helped balance out the decline. Sunny Isles Beach Mayor Norman Edelcup said he expected a greater increase in the value of new construction, with the opening of projects such as the second phase of Turnberry Ocean Colony and the first of the Trump-Dezer towers on Collins Avenue and 158th Street. Edelcup, who said the slow real estate market has also led to a decrease in revenues from building fees, said he does not anticipate cuts in services. “I’m not surprised by the decrease,” he said. “Our budget will pretty much mirror last year’s.”

However, in North Miami Beach, which has very little new construction — about $5 million — values dropped 5 percent, from $2.73 billion to almost $2.6. “I’ve been prepared for a $3 million to $5 million cut,” Mayor Ray Marin said.

To compensate, City Manager Keven Klopp said he is considering increasing fees for garbage collection and other services, cutting recreational programs, tutoring and job assistance services and possibly cutting back on positions and some employee benefits.

“It could be a little bit of everything,” said Klopp, who said he foresees employee layoffs. “As we decrease services to the public, the way we save money is to have a smaller workforce.”

The city of Miami Beach’s situation is unusual in that the value of its existing property actually increased in value by 0.6 percent, from $26.85 billion to $27 billion. Patrick Smikle, a spokesman for the county property appraiser’s office, said that’s because Amendment One’s primary focus was on residential tax relief. “The greatest impact has been where you have a greater amount of residential properties as opposed to commercial properties,” he said.

The only Miami-Dade cities where existing property increased in taxable value were Miami Beach, Medley and Florida City.

The city of Miami Beach also added $90 million in new construction to the tax rolls this year. Even so, the city expects to be frugal in planning its budget. “Last year was a belt-tightening budget, and we are going through a very similar process this year,” said Kathie Brooks, director of budget and performance improvement for the city of Miami Beach.

All three cities will hold budget hearings in July and August after the release of the final tax rolls; public hearings will be held in September.